The Senate’s financial-reform bill is a careful attempt to make sure we never again have to choose between bailing out large banks or watching the economy sink into the abyss.

The reforms in this bill will balance the need to maintain New York’s leadership in a vital industry while ensuring that excessive risk-taking will never again threaten to bring down the US economy. It is smarter and stronger regulation.

AIG, Bear Stearns and Lehman Bros. — who, between them, employed thousands of New Yorkers — didn’t fail because they were too heavily regulated. They failed because they were hardly regulated at all.

We are above 10 percent unemployment in New York City not because of any reform proposal that has yet to become law but because we had a broken-down, 1930s regulatory system that let too many firms slip through the cracks and escape meaningful regulation altogether.

I firmly believe that a more strongly and smartly regulated Wall Street will be a healthier Wall Street. As Mayor Bloomberg has rightly pointed out, the financial-services industry is one of New York’s most important employers. And the reforms we are proposing will serve to strengthen that.

The certainty and stability that financial reform will provide will only make the city more popular as a global financial center for investors and those seeking to raise capital.

But providing certainty and stability is essential. The reforms to do that must:

* Make sure taxpayers never again have to foot the bill when large institutions fail.

* Make sure every large financial institution has a regulator looking over its shoulder to prevent excesses.

* Make sure derivatives — which, when abused, can bring down the whole financial system — are traded transparently, at the very least, and on an exchange whenever possible.

* Reform credit-rating agencies that were laden with conflicts of interest and that too easily gave triple-A ratings.

* Make sure there are strong consumer protections to ensure institutions can’t take advantage of average Americans.

Of course, not everyone agrees with me. Some on the right argue we should do nothing, that the banks have recovered and should be left alone. Some on the left argue we should be much tougher and punish the banks as much as we can. And there are some who say, “Just defend Wall Street, no matter what.”

None of these responses is satisfactory.

In a situation like this, I believe you have to trust your internal gyroscope, resist pressure from both sides and find the proper ground.

I will support and work for smart, strong and forward-thinking legislation that will make the financial system stronger and more resilient. But I will work just as hard to prevent vindictive and merely punitive responses that will hurt New York.

Polling data show New Yorkers, both Republicans and Democrats, agree with this approach. And, as I have learned from extensive conversations, so do most on Wall Street.

Let’s be clear — the economic problems we face are not the result of the financial crisis alone. For too long, America has consumed more than it has produced, imported more than we’ve exported and spent more than we’ve saved. We have many tasks in front of us if we are to restore the American economy.

But there can be no doubt that part of putting us back on the path to prosperity requires instituting smart, thoughtful financial reforms. These will be good for New York and for the nation.